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Facts
The assessee's assessment was reopened u/s 147, with notices issued under s. 148. The reopening was based on information about unexplained credit received from Radhey Enterprises. For one appeal (ITA No. 2652/Kol/2024), the reopening was challenged as being barred by limitation, citing a Supreme Court decision on TOLA.
Held
The Tribunal held that the reopening of assessment for AY 2015-16 was barred by limitation, as the benefit of TOLA was not available for that period. On merits, the addition made by the AO was also found unsustainable based on various judicial precedents.
Key Issues
Whether the reopening of assessment for AY 2015-16 was barred by limitation, and whether the addition made u/s 68 for alleged unexplained credit from Radhey Enterprises was justified.
Sections Cited
147, 148, 144, 144B, 143(3), 68, 115BBE, 148A(b), 145(3), 132(4)
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Income Tax Appellate Tribunal, “D” BENCH, KOLKATA
Before: Shri Rajesh Kumar, AM & Shri Pradip Kumar Choubey, JM]
ORDER Per Shri Rajesh Kumar, AM
Both these appeals filed by the assessee are against the separate orders of Ld. CIT(A), NFAC, Delhi dated 17.10.2024 for AYs 2014-15 & 2015-16 arising out of assessment order passed u/s. 147 r.w.s. 144 r.w.s. 144B of the Income Tax Act, 1961 (hereinafter referred to as the “Act”) by Assessment Unit, Income Tax Department dated 24.05.2023 and 23.05.2023 respectively.
Firstly, we take up ITA No. 2652/Kol/2024. The issue raised in ground no. 1 is against the order of Ld. CIT(A) confirming the reopening of assessment u/s. 147 of the Act when the notice issued u/s. 148 is barred by limitation.
The facts in brief are that the assessee filed the return of income on 15.10.2015 declaring total income of Rs.2,15,44,030/- which was revised on 31.03.2016 declaring the income at Rs.92,09,720/-. The case thereafter was subjected to scrutiny and assessment was framed u/s. 143(3) on 13.12.2017 assessing the income at Rs.1,90,63,285/-. Thereafter, the Assessing Officer received information that assessee company has received unexplained credit through Radhey Enterprises amounting to Rs.2,83,86,912/-, which was done by rotating s 2 & 2652/Kol/2024 Uniseven Engineering & Infrastructure P. Ltd., AYs 2014-15 & 2015-16 the funds in favour of the assessee. Accordingly, notice u/s. 148 of the Act was issued to the assessee on 13.04.2021 after obtaining approval of the competent authority. As per the order of Hon’ble Apex Court in the case of Union of India Vs. Asish Agarwal, Civil Appeal No. 3005/2012 read with the Instruction No.1/2022 dated 11.05.2022 issued by CBDT, the said notice u/s. 148 was treated as show cause notice in terms of section 148A(b) of the Act. The assessee has not replied to the notice issued u/s. 148A(b) dated 27.05.2022 and thereafter, notice u/s. 148 of the Act was issued to the assessee on 26.07.2022 which was also not attended by the assessee. Finally, the assessment was framed vide order dated 23.05.2023 passed u/s. 147 r.w.s. 144B of the Act by making various additions of Rs.2,83,86,912/- u/s. 68 r.w.s 115BBE of the Act.
The Ld. Counsel vehemently submitted before us that the notice issued u/s. 148 of the act is barred by limitation as benefit of TOLA is not available to the assessment year 2015- 16. The assessee relied on in defense of his arguments on the decision of Hon’ble Apex Court in the case of Rajeev Bansal (Civil Appeal No.8629 of 2024, reported in 167 taxmann.com 70 (SC) pronounced on 03.10.2024 which has been followed by Hon’ble Delhi Court in the case of Ibibo Group Pvt. Ltd. Vs. ACIT in WP(C) No. 17639/2022 order dated 13.12.2024 wherein it has been held that reopening of assessment for 2015-16 is not permissible in the extended period as per TOLA on and from 01.04.2021. The said decision has been followed by the Coordinate Bench in the case of Orbit Financial Capital, ITA No. 5812/M/2024. The ld. AR submitted that even the Coordinate Bench in the case of Coplama Products Pvt. Ltd. in pronounced on 31.01.2025 has followed the said decision. Thereafter, the Rajasthan High Court in WP No. 3667 of 2023 vide its order dated 27.01.2025 has taken the similar view. The Ld. AR, therefore, prayed that the same may kindly be quashed.
The Ld. DR, on the other hand, relied on the orders of the authorities below.
After hearing the rival contentions and perusing the material available on record, we find that undisputedly, the notice u/s. 148 of the Act was issued on 13.04.2021 which falls s 3 & 2652/Kol/2024 Uniseven Engineering & Infrastructure P. Ltd., AYs 2014-15 & 2015-16 beyond the period of limitation and the relaxation granted by TOLA w.e.f. 01.04.2021 to 30.06.2021 is not available in the impugned assessment year as has been held in the case of Rajeev Bansal(supra) by the Hon’ble Apex Court and thereafter the said secision being followed in the case of Ibibo Group Pvt. Ltd. (supra). We note that the Hon’ble Delhi High Court in the case of Ibibo Group Pvt. Ltd. (supra) held that the reopening of assessment for Ay 2015-16 is not permissible in the extended period as per TOLA on and from 01.04.2021. We also note that Hon’ble Rajasthan High Court in WP No. 3667 of 2023 dated 27.01.2025 has taken a similar view. Considering the facts of the assessee’s case in the light of the aforesaid decisions, we are inclined to hold that the reopening of assessment is barred by limitation and is accordingly quashed.
On merits the issue is covered by our decision in (infra) wherein in we have allowed the appeal of the assessee. Therefore, even on merit the addition made by the AO cannot be sustained.
. At the time of hearing the ld. Counsel for the assessee raised only ground nos. 10 and 11 which are against the confirmation of addition of Rs.2,28,06,858/- by Ld. CIT(A) as added by the Assessing Officer on account of sales made to Radhe Enterprises being bogus and non-genuine.
The facts in brief are that the assessee filed the return of income on 30.09.2014 declaring total income of Rs.2,33,30,784/-. The case of the assessee was selected for scrutiny and assessment was accordingly framed u/s. 143(3) vide order dated 15.12.2016. Thereafter, the Assessing Officer received information that the assessee has received unexplained credit from Radhe Enterprises amounting to Rs.2,28,06,858/- which according to the department has been done after layering/rotation of funds. Accordingly, notice u/s. 148 was issued on 13.04.2021 and in view of the decision of Hon’ble Apex Court in the case of Union of India Vs. Asish Agarwal (supra) and CBDT Instruction No. 1/2022 dated 11.05.2022 the notice u/s. 148 was treated as show cause notice in terms of section 148A(b) of the Act which was not replied by the assessee. Thereafter, the notice u/s. 148 was issued on 27.07.2022. The s 4 & 2652/Kol/2024 Uniseven Engineering & Infrastructure P. Ltd., AYs 2014-15 & 2015-16 assessee vide reply dated 18.08.2022 requested the Assessing Officer to treat the original return filed on 30.09.2014 as in response to the intimation u/s. 148 dated 27.07.2022. The Assessing Officer during the course of assessment proceedings noted that Radhe Enterprises has no creditworthiness for such transactions of funds from their account to the assessee and treated the said company as an accommodation entry provider in lieu of commission. Assessing Officer also noted that assessee has not produced any supporting documents regarding details of purchases which were sold to the Radhe Enterprises, the bill of purchase mode of transport, payment details. The Assessing Officer also noted that assessee stated that it has sold S.S. Pipes to Radhe Enterprises. Thereafter, the Assessing Officer noted that assessee company has only submitted the ledger account of Radhe Enterprises on which there was no signature, no PAN and there was no confirmation from the said party. The Assessing Officer thereafter noted that assessee’s turnover during the year was Rs.29,76,49,044/-. Thereafter, the Assessing Officer noted that the said party Radhe Enterprises was carrying on purchase and sale on papers only and there was no genuine business and finally after rejecting the books of account of the assessee u/s. 145(3) and added the amount as unexplained credit u/s. 68 of the Act.
In the appellate proceeding, the Ld. CIT(A) dismissed the appeal of the assessee by observing and holding as under:
“Appellant's submission and the observation of the Assessing Officer were verified and considered carefully by me. The solitary addition is towards unexplained credit made by the Assessing Officer in the order. Assessing Officer treated the said receipts found in the bank account as "unexplained credit" on the following grounds: In this regard, appellant submitted that the credits in the bank account received from M/s Radhey Enterprises, is sales. Appellant enclosed all the documentary evidences in the form of VAT, invoice and stated that the sales is also forming part of the turnover in the profit and loss account and hence it cannot be treated as unexplained credit. Appellant also filed copy of ledger extract. The items were purchased only in the month of March 2014 from 4th March to 20th March 2014. The total invoice amount was stated to be Rs.2,26,06,858. It could be seen from the credit side, the receipts were made by Radhey Enterprises in three days starting from 19th March, 21st March and 25th March 2014 and each payment was made to the extent of Rs.70 lakhs. There is no PAN and also no signature in the confirmation portion of the ledger extract. If the transactions are genuine, certainly, there will be credit period given by the appellant to make the payment in respect of these debtors who are making such a voluminous purchase and the purchaser has made such payments within 3 days is highly s 5 & 2652/Kol/2024 Uniseven Engineering & Infrastructure P. Ltd., AYs 2014-15 & 2015-16 unrealistic in the line of business without availing minimum credit period. Further, when a transaction is found to be non-genuine, the onus lies on the appellant to satisfactorily prove that the transactions represent sales only by filing clinching evidences in the form of confirmation from the purchaser, correct address of the purchaser, the credit worthiness of the purchaser. Similarly, copy of invoices filed by the appellant have been verified. It could be seen from the invoices, the details of items mentioned in the invoices are stereotyped. The items were mentioned as S.S. It could be seen from the sample invoice the quantity purchased on 04.03.2014 was 8,913 Kg. Considering the weight of the item delivered, the date of delivery of the items and how the items were sent to the purchaser ought to have been submitted to confirm the supply of goods. Further, as pointed out by the Investigation Team, M/s Radhey Enterprises is a shell company without any credit worthiness. If the company is able to make a payment of nearly Rs.2 crores in the month of March 2014, it is for the appellant to prove that the said firm had paid the sum towards sale of S.S. because as per the information, the status of the company is stated to be struck off and when the company is not in existence as on the date of survey and it was also proved that Radhey Enterprises did not have the credit worthiness to pay such huge amount within a span of one month from the date of purchase of items. All these inferences clearly prove that this is an accommodation entry made in the garb of sales and there were no movement of goods and these were book entries. Even though the payments were made through banking channel, it was stated by the Investigation team that before transferring the funds to the beneficiaries, there were huge cash deposits in the bank account of Manoj Gupta which was transferred to the shell companies. The said fact of deposit sin the bank account were confirmed to be accommodation entries. A statement recorded under Sec.132(4) from the accommodation entry provider constitute a credible evidence as the assessment of accommodation entry providers in so many cases resulted in only assessing the commission income earned for providing accommodation entries and the credits in the form of deposits were disowned by these accommodation entry providers holding that these amounts belong to the beneficiaries. In these circumstances, the action of the Assessing Officer in treating the receipts from M/s Radhey Enterprises as unexplained credit is upheld and the grounds raised on this issue stands dismissed.”
11. After hearing the rival contentions and perusing the record, we find that the reopening was made u/s. 148 on the ground that assessee is beneficiary of credit entries received from M/s. Radhey Enterprises. We note that during the course of assessment proceedings the assessee explained before the Assessing Officer that these were not unexplained entries but in fact sale made of SS Pipes to the said concern and the money received represented the consideration received by way of sale consideration for supply of such items to M/s. Radhey Enterprises. We note that the Assessing Officer rejected the books of account u/s. 145(3) after the assessee replied to the show cause notice dated 25.04.2023 submitting therein that the books of account have not been rejected and therefore, no addition is called for. Thereafter, the Assessing Officer again issued show cause notice on 15.05.2023 proposing to reject the books of account and thereafter the assessee replied the said show cause on 18.05.2023 submitting that all the books of accounts were properly maintained and all the s 6 & 2652/Kol/2024 Uniseven Engineering & Infrastructure P. Ltd., AYs 2014-15 & 2015-16 sales were verifiable and also day to say stock register properly maintained which was duly verified by the statutory auditors. It was also submitted that full details of purchases were filed along with details of sales, copies of sale invoice of Radhey Enterprises, copy of VAT returns which showed that all these sales were genuine for which confirmation was also filed. The assessee also submitted that these transactions were also made through banking channel and Assessing Officer instead of bringing on record any material to the contrary relied on the data/details uploaded. Finally, the AO rejected the books of account and made the addition based on the said material. In our opinion, the addition cannot be made u/s. 68 on the basis of mere suspicion by treating the sale as not genuine. The case of the assessee finds support from the decision of Punjab & Haryana High court in the case of CIT Vs. Om Overseas [2008] 173 Taxman 185 and Hon’ble Gujarat High Court in the case of CIT Vs. Vikram Plastics [1999] 239 ITR 161. We also note that the sales made by the assessee cannot be treated as unexplained cash credit when the debtors are realized and the case is squarely covered by the decision of Coordinate Bench in the case of Sukamal Maity in dated 09.05.2024. The case of the assessee is also supported by the decision of coordinate bench in the case of Shree Sanand Textile Industries P. Ltd. in dated 06.01.2020 wherein it has been held that sale proceeds cannot be taken as cash credit u/s. 68. We note that the assessee has duly shown the receipt of its sale proceeds in the books of account which was evidenced with bills, vouchers, sale bills, receipts through banking channel etc. and has offered to tax whatever amount on the said sales and if at all these sales are again added the same will be double taxation which is not permissible under the Act. The case of the assessee finds support from the decision of ITO Vs. Ashapurna Petrochem Marketing P. ltd. in dated 18.10.2023 wherein it has been held that provisions of sec. 68 cannot be applied in respect of sale receipt shown by the assessee in the books of account because these sale receipts were shown in the books of account as income at the time of sale only and once the purchase has accepted by the Assessing Officer the corresponding sale cannot be disturbed without giving any conclusive evidence or finding. Similar view has been taken by the Jaipur coordinate bench in ITA No. 166/JP/2022 in Sri Chandra Surana dated 15.12.2022. Considering the facts of the assessee’s case in the light of s 7 & 2652/Kol/2024 Uniseven Engineering & Infrastructure P. Ltd., AYs 2014-15 & 2015-16 aforesaid decisions, we are inclined to set aside the order of the Ld. CIT(A) and direct the Assessing Officer to delete the addition.
In the result, both the appeals of the assessee are allowed.